{
  "title": "The Low-Skill, Bad-Job Trap",
  "publication": "IMF Working Papers, July 1, 1994",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/30/the-low-skill-bad-job-trap-870",
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  "summary": "The paper explains how a country can fall into a “low-skill, bad-job trap,” in which workers acquire insufficient training and firms provide insufficient skilled vacancies.",
  "sections": [
    {
      "heading": "Core findings",
      "content": "- The paper explains how a country can fall into a “low-skill, bad-job trap,” in which workers acquire insufficient training and firms provide insufficient skilled vacancies.\n- In countries where a large proportion of the workforce is unskilled:\n  - Firms have little incentive to provide good jobs (requiring high skills and providing high wages).\n  - If few good jobs are available, workers have little incentive to acquire skills.\n- The paper examines the need and effectiveness of training policy in breaking this trap.\n- The paper provides a possible explanation for why western countries have responded so differently to the broad-based shift in labor demand from unskilled to skilled labor."
    },
    {
      "heading": "Mechanisms and analytical themes",
      "content": "- Interaction between labor demand and labor supply:\n  - Low-skilled workforce → low incentives for firms to create skilled vacancies.\n  - Few skilled vacancies → low incentives for workers to invest in training.\n- Market failures emphasized:\n  - Training supply externality.\n  - Vacancy supply externality.\n- Labor market outcomes discussed:\n  - Skilled labor versus unskilled labor dynamics.\n  - Wage-employment experience and earnings differentials tied to job quality and skill composition."
    },
    {
      "heading": "Policy implications and areas analyzed",
      "content": "- Need and effectiveness of training policy:\n  - Training policy is analyzed as a potential instrument to address the coordination failures between firms’ vacancy decisions and workers’ training choices.\n- Explanation for heterogeneous responses across western countries to shifts in labor demand:\n  - Differences in how countries addressed training and vacancy creation may account for divergent labor-market outcomes."
    },
    {
      "heading": "Subject areas and keywords",
      "content": "- Subject: Education, Labor, Labor demand, Labor supply, Skilled labor, Wages\n- Keywords: Central and Eastern Europe, earnings differential, Europe, job vacancy, Labor demand, Labor supply, market failure, Skilled labor, training function, training supply externality, vacancy decision, vacancy supply externality, wage-employment experience, Wages, WP\n\n---\n\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/30/the-low-skill-bad-job-trap-870"
    }
  ],
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    "Authors: Alun H. Thomas",
    "Published: July 1, 1994",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451954524.001",
    "The paper explains how a country can fall into a “low-skill, bad-job trap,” in which workers acquire insufficient training and firms provide insufficient skilled vacancies.",
    "In countries where a large proportion of the workforce is unskilled:",
    "The paper examines the need and effectiveness of training policy in breaking this trap.",
    "The paper provides a possible explanation for why western countries have responded so differently to the broad-based shift in labor demand from unskilled to skilled labor.",
    "Interaction between labor demand and labor supply:",
    "Market failures emphasized:",
    "Labor market outcomes discussed:",
    "Need and effectiveness of training policy:",
    "Explanation for heterogeneous responses across western countries to shifts in labor demand:",
    "Subject: Education, Labor, Labor demand, Labor supply, Skilled labor, Wages",
    "Keywords: Central and Eastern Europe, earnings differential, Europe, job vacancy, Labor demand, Labor supply, market failure, Skilled labor, training function, training supply externality, vacancy decision, vacancy supply externality, wage-employment experience, Wages, WP"
  ],
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}